Harry Mottram reports
With the news of more insolvencies in the printing industry Print Monthly sort the views of one of the key figures in the business who knows some of the dark secrets of struggling firms.
Ian Carrott of ICSM Credit the printing industry’s business finance intelligence group whose members circulate information about who is in trouble says the problem remains the same. Namely that of companies not sticking to their terms and conditions. Print Week reported this week that Bournemouth Colour Press had gone into voluntary liquidation in part due to a supplier running out of patience. They said the supplier issued a winding up petition: “forcing the company to pay £25,000 up front in January.”
Although each case is different with a range of factors Carrott believes that allowing customers to have extended credit terms can be fatal. He comments: “Late payment is a perennial problem for the print industry which traditionally has had a feature of ‘my word is my bond’ with personal assurances on credit terms. The problem is when things get tight financially that personal assurance is quickly abandoned. At ICSM Credit we frequently hear of suppliers refusing to chase up late payments for various reasons that include ‘not upsetting a good customer’ to the blind belief their customer will always pay and even a total lack of credit control. The consequence is the print firm may be running up a huge overdraft or are unable to pay their own debts when the money they have earned is sitting in their client’s bank account.”
With Polestar, Headley Brothers, Henna, FT and Henry Stone all hitting the rocks it is usually the suppliers and the workers that are hit hardest. Criticism is aimed at the directors and owners who allow their firms to get into debt but sometimes seem to come out of their operation’s demise smelling of roses. Pre-packs, swift changes to a business name, asset stripping and take-overs that promise much but deliver little have become features of today’s industry says Carrott.
He continues: “The Chancellor announced consultations with small businesses in his budget but we have heard it all before. There is partly a culture of late payment within the industry and partly a need for legislation. To start with it would make a huge difference if the Government were to insist on all Government, local Governments and tax payer funded organisations and their contractors and their subcontractors to pay on 30 days. That would take care of a huge chunk of British industry and would set an example to the rest of the country.”
Sadly it would seem the current sharp practices and late payment atmosphere shows no signs of changing any time soon.
For more stories from Harry visit www.harrymottram.co.uk
For Harry on Twitter @harrythespiv and on Facebook, LinkedIn, YouTube and Instagram as Harry Mottram